Journalism in the Public Interest


Fourth Bank Says It Will Give Back Bailout Bucks

ProPublicaAdd Sun Bancorp of New Jersey to the short list of banks that say they’re giving the Treasury its money back. Sun got $89.3 million on Jan. 9.

That brings us to four banks that have announced they’ll be returning the Treasury’s investment. As we said earlier this week, while this is a growing trend, it’s worth stressing that nearly 500 banks have received money from the $700 billion bailout.

Here’s how Sun’s CEO explained the giveback (via a press release):

When the Capital Purchase Program became available to well capitalized and healthy financial institutions like Sun, it was a positive partnership between the government and business to stimulate the economy through additional lending and community support. The partnership then became politicized, the rules and regulations changed, and the dynamics of the partnership substantially shifted. These changes significantly restricted the way we support our customers and communities, as well as the way we run our business.

It’s an explanation that echoes remarks from the other CEOs of banks returning the money: The bailout is unpopular, there are all sorts of congressional and public pressure to lend at a high level, and they don’t like the new strings attached. None of them specifically mention the biggest string of all: new restrictions on executive pay. In the case of Sun, the bank’s five highest compensated executives would have seen their bonuses limited under new rules passed by Congress earlier this year.

The other banks that have announced their intention to return the money are: Signature Bank of New York ($120 million), Minnesota’s TCF Financial ($361 million), and Louisiana’s IberiaBank ($90 million).

Under the law, the banks must notify the Treasury Department 30 days before returning the money.

March 13, 2009, 3:51 p.m.

It may not seem like a feasible priority to some considering the economic conditions our country is under, but according to the Borgen Project only $19 billion a year is needed to end world hunger- a tiny amount compared to how much money has recently been spent on federal bailouts to irresponsible corporations.

For this amount of money the lives of people living in dire poverty would be drastically improved and this in turn will benefit the United States. A study conducted by the U.S. estimated that if the World Food Summits goal of reducing hunger by half is met; it will lower the cost of peacekeeping and humanitarian operations by $2.5 billion per year. Furthermore, According to USAID, more than 40 percent of all U.S. exports and half of U.S. agricultural exports are sold to developing countries—these annual exports account for about 4 million U.S. jobs. As people in developing countries are assisted out of poverty, more jobs are created in the U.S.